Real Estate Appraisal and Time Management Calvin Cummings, MAI Cummings Appraisal Group, Inc.

Real Estate Appraisaland

Time Management

Calvin Cummings, MAI Cummings Appraisal Group, Inc.

Calvin Cummings, MAI

1983-1988: Cushman & Wakefield

1988-1998: CB Richard Ellis

1998-2002: Unicity International

2002-2002: LoopNet

2002-2008: Cummings Appraisal Group, Inc.

Founder, Editor, Publisher, CB Richard Ellis National Investor Survey, 1991-1997

Appraised properties totaling in excess of 100 million Sq.Ft. and $10 billion since 1983

An Introduction toReal Estate Appraising

Calvin Cummings, MAI Cummings Appraisal Group, Inc.

Appraiser

Definition:– “One who is expected to perform valuation services

competently and in a manner that is independent, impartial, and objective.” 1

1 Uniform Standards of Professional Appraisal Practice (USPAP)

The Valuation Process

Define the Appraisal Problem Determine Scope of Work Collect Data & Describe Property Analyze Data Estimate Land Value Apply Applicable Approaches to Value Reconcile Value Indications Report Final Value Conclusion The Appraisal Report

Definition of the Problem

Identify Client & Intended Users Intended Use of Appraisal Purpose of Appraisal & Definition of Value Date of Opinion of Value Identify Property Characteristics Extraordinary Assumptions Hypothetical Conditions

Scope of Work

Extent Property is Identified Extent Property is Inspected Type and Extent of Data Researched Type and Extent of Analysis Applied

Data Collection & Property Description

Market Area Data:– Region, City & Neighborhood Data– Apartment, Industrial, Office & Retail Market Data

Subject Property Data:– Land, Improvements, Personal Property, etc.

Comparable Property Data:– Cost and Depreciation– Sales, Listings, Offerings– Income, Vacancy, Expenses, Cap Rates, etc.

Data Analysis

Market Analysis:– Market Study– Marketability Study

Highest and Best Use Analysis:– Site As Though Vacant– Property As Improved

Land Value Opinion

Sales Comparison Extraction Allocation Subdivision Development Land Residual Ground Rent Capitalization

Apply Applicable Approaches to Value

Cost Sales Comparison Income Capitalization

Cost Approach

Select One of Two Possible Cost Bases:– Replacement or Reproduction Cost

Estimate Costs Using 1 of 3 Techniques:– Comparative-Unit, Unit-In-Place, or Quantity Survey

Estimate Depreciation (1 of 3 Methods):– Age-Life, Market Extraction, or Breakdown

Depreciated Value of Improvements Add Contributory Value of Site Improvements Add Land Value (Based on H&B Use as Vacant)

Cost Approach

Research & Verify Sales Data: CoStar:

– COMPS, Commercial MLS, Property Professional Loopnet:

– Property For Sale or Lease, Recent Sales Multiple Listing Services:

– i-Tech MLS, TheMLS, MRMLS, MLSAlliance RealQuest.com, RENTV.com, LABJ, etc. Appraisers, Brokers, Sellers, Buyers

Sales Comparison Approach

Sales Comparison Approach

Comparative Analysis: Real Property Rights Conveyed Financing Terms Conditions of Sale Expenditures Made Immediately After Purchase Market Conditions (Time) Location Physical Features Economic Characteristics Use (Zoning) Non-Realty Components of Value

Sales Comparison Approach

Sales Comparison Approach

Income Capitalization Approach

Income & Expense Analysis: Contract Rent (Lease Analysis) Market Rent (Comparable Lease/Rental Survey) Potential Gross Rental Income (PGRI) Other Income (Reimbursements & Misc. Income) Potential Gross Income (PGI) Vacancy & Credit Loss Allowance (V&CL) Effective Gross Income (EGI) Operating Expenses (Expense Analysis) Net Operating Income (NOI) Tenant Improvement Costs & Leasing Commissions Annual Cash Flows & Reversionary Value

Income Capitalization Approach

Direct Capitalization:– Convert single year’s income– Divide Net Income by Cap Rate– Multiply Gross Income by GIM

Yield Capitalization / DCF Analysis:– Forecast Annual Cash Flows & Reversion– Discount Cash Flows with Yield Rate

Income Capitalization Approach

Reconciliation of Value Opinions

Dependability/Applicability of Each Approach Variations/Differences Among Indications Weighting of Value Indications Final Value Conclusion:

– Single-Point Estimate– Value Range

The Appraisal Report

Standards (USPAP, Appraisal Institute) Report Options:

– Self-Contained Appraisal Report– Summary Appraisal Report– Restricted Use Appraisal Report

Types of Reports:– Oral Reports– Form Reports (URAR, 71-A, 71-B, etc.)– Narrative Reports

The Appraisal Report

Title Page Letter of Transmittal Table of Contents Summary Appraisal/Report Type Assumptions Purpose/Intended Use Value Date/Definition Property Rights Appraised Scope of Work Property Identification History of Property Location Data

Site Description / Zoning Improvement Description Taxes & Assessment Data Market Analysis Highest and Best Use Analysis Land Valuation Cost Approach Sales Comparison Approach Income Capitalization Approach Reconciliation Estimate of Exposure Time Qualifications of Appraiser Addenda

Questions

Calvin Cummings, MAI Cummings Appraisal Group, Inc.

Calvin Cummings, MAI Cummings Appraisal Group, Inc.

Time Management“Life is Not a Dress

Rehearsal”

Time Management - Why & How?

Live a Balanced Life Gross a Successful BusinessAllows You to Achieve Your Dreams Set Goals, Plan, Prioritize & Execute Project & Task Management Getting Organized Taming the “Paper Tiger” Managing E-mail

A Balanced Life

Spiritual

Intellectual

Emotional

Physical

Family

Professional

Financial

Time Management Books

Growing a Successful Business

Leadership

Management

Strategic Marketing

Lead Generation

Lead Conversion

Client Fulfillment

Accounting & Finance

Achieving Your Dreams

# 1 - Set Goals– For each life or work area• S pecific• M easurable• A ttainable• R ealistic• T imely

# 2 - Create a Plan

# 3 - Take Action!

“If You Fail to Plan, You’re Planning to

Fail”

“A Goal Without a Plan is only a Dream”

“A Journey of a Thousand Miles Starts with but a Single Step”

Planning – Using an Outline

Create a Hierarchical Outline: Level 1: Personal & Business

– Level 2: Result Areas or Roles Level 3: Goals

– Level 4: Projects Level 5: Tasks

Planning – A Work Example

Work– Sales (Salesperson)

Goal: I’ve personally earned $50,000 in commissions in 2Q08 by selling 3 of my investment property listings totaling $1,700,000 and qualified for the Top 5, $25,000 Bonus Pool by July 1st. I feel tremendous confidence achieving goals I set for myself and I feel so relaxed after taking a luxurious 2-week cruise to Hawaii.

– Project 1: Generate 300 qualified leads by 3/31/08 Task 1: Order title co list of apt bldg owners in SFV area Task 2: Send list to PrintPros to do direct mail campaign Task 3: Have Assistant contact 20 owners per day

Managing Projects & Tasks

Let Assume:– 8 Result Areas or Roles x 5 Goals = 40 Goals– 40 Goals x 3 Projects = 120 Projects ! ! !– 120 Projects x 3 Tasks = 360 Tasks ! ! !

How do you manage all these tasks?

Prioritize Projects & Tasks

Prioritizing

Pareto Principle

FranklinCovey ABC-123 Prioritization Scheme

Stephen Covey Time Management Matrix

20% of Efforts = 80% of Results

Simplify & Focus

Simplify Your To-Do List

Focus on Top 3-5 Projects

List only Next Actions (NAs)

Work on One Thing at a Time

Avoid Procrastination

Procrastination

Break large projects into smaller manageable tasks

What is the one Next Action that moves Project forward?

Eat That Frog, by Brian Tracy

Feel The Fear and Do It Anyway, by Susan Jeffers

Planning Tools

Planners (FranklinCovey, Time/Design) Swift To-Do List OneNote & Outlook Outlook with Business Contact Manager AchievePlanner

Time/Design Planner

Swift To-Do List

OneNote & Outlook 2007

Outlook 2007 with BCM / MOA

Achieve Planner

Daily vs. Weekly Planning

Tyranny of the Urgent

Quadrant II Focus

Big Rocks

“The Key is not to prioritize what’s on your schedule but to schedule your priorities”

Weekly Planning - AchievePlanner

Weekly Planning - PlanPlus Online

Weekly Planning - Planner Pad

Weekly Planning - Outlook 2007

Get Organized

Invest in the right equipment:– Hanging & Manila File Folders– Rolling File for Active Projects– Vertical File Holders & 3-Ring Binders– Brother P-touch labeler– Dymo LabelWriter– CardScan (Business Cards)– Xerox DocuMate 252 Duplex Scanner– PDA/Smartphone

Desktop Supplies

Inbox, Round & Rolling File

Wire Incline Files Holder

Binders in Vertical File Holder

Active Projects Filing System

Archive File Storage Cabinets

Labeler & Scanner

Knowledge Worker Workstation

Bookcase for Books & Notebooks

Shelving System for Office Supplies

Clear Plastic Storage Containers

Metal Holders for Supplies

Taming the Paper Tiger

• Make list of areas to organize & prioritize• Make list of equipment/materials & buy• Set up organization systems in your office• Purge/throw away unwanted materials• File active projects in short-term projects area• File archive materials in long-term file area• Use Inbox as one and only collection point• Process Inbox twice daily• Stop stacking and start filing

Outlook Email Best Practices

Time Management Summary

Look at All Areas of Your Life Set Goals, Plan, Prioritize & Execute Simplify Your Project & Task Lists Start Using Weekly Planning Focus & Overcome Procrastination Get Organized Master Your Paper Inbox Learn How to Master Your E-mail Inbox

Questions

Calvin Cummings, MAI Cummings Appraisal Group, Inc.